~ An Aussie look at Financial markets-Been in the Biz for over 30 years!

Friday 22nd February – Australian Market Wrap

ASX 200 up 28 to 6167. US futures down 12. High volume following expiry day yesterday. A brief respite from report overload but once again buyers shrugged off a weak lead from overseas, especially in the banks. Comments from RBA head in front of a parliamentary committee helped sentiment too. Coal miners softer on Chinese ports reports. Good numbers from IVC and relief at AHG helped sentiment though HSN disappointed. In Asia Iron ore futures down sharply on weak demand. AUD still just below 71c.

Todays Highlights

ASX 200 marches higher by 28 points to 6167.

High 6176 Low 6126

Banks draw buyers with REITs and bond proxies.

Industrials push higher.

Miners softer on profit taking and Chinese issues.

Energy steady. WPL ex-dividend.

AUD steady at 70.92c

Bitcoin rises to US$3914

Aussie Gold steady at $1868

US futures down 10.

Asian markets slightly weaker with Japan down 0.27% and China down 0.09%

STOCKS IN FOCUS

IVC +12.00% results cheer.

WEB +8.42% broker upgrades.

PGH +8.75% bargain hunters continue.

NEA +4.51% brokers warm to it.

BAP +5.74% car stocks back in fashion despite everything.

HSN -10.36% disappoints.

SAR -5.28% Blackrock sells down holdings.

JMS -3.03% profit-taking.

BIN -2.97% ceasing to be a substantial holder.

HLO -2.51% issues a denial of ‘Hockeygate’.

BID -32.84% caution rewarded as Chair leaves suddenly.

CGL -8.22% ex-dividend ex-everything.

NTC +50.00% bid agreed at 110c.

BWX +30.43% results cheer as new CEO optimistic.

SYR +6.04% shorts covering.

MOC +12.42% AFG +5.93% Labor backflips on broker fees.

CAT +7.69% results draw buyers out.

PLS +6.52% lithium prices moving up.

ASX +1.14% kicks again.

TCL +1.21% bond proxies doing well.

BLD +3.77% turning a corner.

TGR -0.80% CEO sells half his stock to pay tax. .

Speculative stock of the day: Cirrus Networks (CNW) +58.33% after delivering record H1 revenues and strong earnings. $45.7m of revenue for H1 represents a 49% increase on last year. CNW is an IT solutions provider across cloud computing,storage, and data management. Looks interesting.

Biggest Risers – IVC, AHG, PGH, WEB, NEC, PNI and PLS

Biggest Fallers – HSN, REG, SAR, MYX, SFR, WTC and CYB

TODAY

HelloWorld (HLO) -2.51% Late last night the CEO issued a denial following ‘erroneous’ information in Senate Estimates. “I did not organise any meetings between Russell Carstensen and Joe Hockey. Mr. Carstensen’s own email of 24 April 2017 shows that he organised the meeting with Mr. Hockey and I was simply CCed on the email.” “I emphatically deny ever having told Mr. Carstensen that Mr. Hockey “owes me” or any words to that effect.”

Netcomm (NTC) +50.00% Half yearly results will be ignored really given a 110c bid from Casa Systems. Group revenue up 6.5% on 1H18 to $94.3m (FY19 Revenue guidance of 15-20% growth reaffirmed). NPAT $2.3m, compared to $3.7m in 1H18. The Company reaffirms the FY19 guidance provided with the FY18 result, namely that revenue is forecast to grow 15-20%, reported EBITDA to be in the range of $15m to $18m. The company has also announced CEO Ken Sheridan will step aside as CEO due to family health issues. NTC is involved in 5G networks and the IoT. Looks like an opportunistic bid. The company has recommended the deal.

Platinum Asset Management (PTM) –0.78%First-half profit fell 2.7%. Statutory net profit of $74.9m with revenue down 28% to $133m. Higher base fees of $148.8m Performance fees of just $22,000. That’s right $22,000. Funds under management at the end of January stood at $24.7bn. Dividend of 13c. The funds are underperforming and the fund manager has not addressed this in the presentation. Prefer MFG. PTM is supposed to give access to Asian growth. Since Kerr Neilson has stepped back the funds seem to have lost their mojo. Not sure how it gets that back.

BWX limited (BWX) +30.43 First half underlying NPAT came in at $4m vs consensus of $3.2m. Revenue beat at $68.1m vs estimates of $66.9m, underlying EBITDA was in line with expectations at $7.1m. No dividend declared, BWX said it would review its dividend outlook at FY results. FY adjusted EBITDA is expected to be between $27 and $29m vs prior guidance of $27 to $32m.

Regis Healthcare Limited (REG) –5.33% First half normalised NPAT came in at $24.7m vs consensus of $23.7m. MD and CEO Ross Johnston to step down, effective September 3. Normalised revenue and EBITDA both missed estimates at $318.2m and $56.7m respectively. FY NPAT guidance reaffirmed, expected to be between $47-51m. H2 EBITDA anticipated to be in line with the first half.

Automotive Holdings (AHG) +8.83% No interim dividend declared to strengthen the balance sheet. Impairment charges of $249.8m FY Guidance of $56m-59m from $56m-$59m. Some of this bad news is in the price as it updated the market already. Not a great result and the Refrigerated Logistics division is the main culprit although the company believes that the performance is improving. This is the business the company tried to sell but failed.

Icar Asia (ICQ) +9.09% FY NPAT $13.6m v $13.0 forecast. 27% increase in revenue year-on-year to $11.6m. The Company had $9.5m in cash and cash equivalents. Guidance reaffirmed. EBITDA and cash flow are positive as per the guidance in 2018.

Mayne Pharma (MYX) -5.00% NPAT $21.1m vs forecasts of $38.2m. .Revenues of $274.4m, an increase of 13% in 1HFY18. Underlying NPAT of $21.1m, an increase of 35% in 1HFY18. Reported NPAT of $2.6m, following a loss in pcp. Outlook statement: “The company will continue to maintain a conservatively structured balance sheet and drive organic growth and pursue shareholder value accretive business development opportunities while improving profitability and cash flow through an efficient operating model”. This looks like a miss on estimates.

Hansen Technologies (HSN) -10.36% EBITDA of $28.5m, which equated to an EBITDA margin of 25.3%. Operating revenue for 1H19 was $112.4m, $6.0m (5.1%) down on 1H18 and consistent with 2H18. Recurring revenue represented 63% of total revenue in 1H19. Expectations for FY19 remain unchanged from the guidance provided on 17 August 2018. Operating revenue is expected to be slightly below FY18. Expense base for the full FY19 year is expected to remain consistent with FY18. An interim dividend of 3c fully franked.

ECONOMIC DATA

Some highlights from Dr. Phil in front of Inquiry..

Governor Philip Lowe says income growth more important than falling house prices

Changes to loan broking industry “worth taking the time to get this right,” says Lowe.

The US seems to have trouble exercising fiscal discipline, he said. He added he hoped the Australian parliament doesn’t head down the same path.

He also revealed the new $20 note together with a surprise $4bn gold holding in London. 80 tonnes in the Bank of England Vault.

Lowe repeated that he did not see falling house prices “derailing the economy”

Scary statistic. 30% of all jobs in Australia are part-time. 25% of those want extra work.

The IMF has warned both sides of politics not to engage in a pre-election spending spree. As if they would.

BOND MARKETS

2-Year bond yields up 4 bps to at 1.69%

5-Year yields up 5bps to 1.72%

10-Year yields up 4bps to 2.09%

ASIAN NEWS

Thai exports crash to lowest in 6 years.

Chinese house prices climb to a 19-month high.

EUROPEAN AND US NEWS

Trump is meeting China’s top trade negotiator in the US on Friday.

US Department of Agriculture will release its export data tonight showing how many beans the Chinese have really bought. Its last forecast was for 1.875bn bushels of soybeans. Unfortunately, China seems to have worked out how to feed their pigs less protein than they have been. Small producers are suffering as African swine fever hits production.

Kraft gets hit with SEC subpoena.

Trump may be softening on Huawei in a trade war concession.

Pinterest has lodged an IPO listing proposal.

Ford said it has become aware of a potential issue regarding its US emissions certification process.

The Brexit saga continues. Almost as bad as Downtown Abbey. Now 100 UK conservatives stand ready to force a delay if the PMs deal fails.

UK Retailers have warned that a no-deal Brexit will lead to “unaffordable” price hikes on food and drink for customers in both the UK and Ireland as well as causing shortages of some everyday items. Could rise by as much as 45%.

Hey Hey.Peter Tork dies. RIP the bassist from The Monkees.

And finally……………

Bill wakes up at home with a huge hangover.

He forces himself to open his eyes, and the first thing he sees is a couple of aspirins and a glass of water on the side table.

He sits down and sees his clothing in front of him, all clean and pressed.

Bill looks around the room and sees that it is in a perfect order, spotless, clean. So’s the rest of the house. He takes the aspirins and notices a note on the table “Honey, breakfast is on the stove, I left early to go shopping. Love you.”

So he goes to the kitchen and sure enough there is a hot breakfast and the morning newspaper. His son is also at the table, eating. Bill asks, “Son, what happened last night?”

His son says, “Well, you came home after 3 A.M., drunk and delirious. Broke some furniture, puked in the hallway, and gave yourself a black eye when you stumbled into the door.”

Confused, Bill asks, “So, why is everything in order and so clean, and breakfast is on the table waiting for me?” His son replies, “Oh that! Mum dragged you to the bedroom, and when she tried to take your pants off you said, “Lady leave me alone, I’m married’!”

Finding one of her students making faces at others on the playground, Ms. Smith stopped to gently reprimand the child.

Smiling sweetly, the Sunday school teacher said, “Johnny, when I was a little girl, I was told if that I made ugly faces, it would freeze and I would stay like that.”